China Is Splurging On Big-Name Soccer Talent

In the past few weeks, the Chinese Football Association Super League — the country’s premier professional soccer league — has been on a shopping spree. By the close of the January transfer window, the Chinese Super League had outspent England’s Premier League in the transfer market; the CSL made five of the six largest transfer signings in the 2015-16 window.

By attracting big-name talent, CSL clubs are signaling the rise of Chinese soccer power — at least financially. (The value of the signings to club owners likely has as much to do with marketability of the players for product endorsement purposes as it does with improving the team.) This power has grown in lockstep with the league’s attendance and revenue. Since the league was founded in 2004, total CSL attendance has surged from 1.4 million to more than 5 million in 2015; per-game attendance has more than doubled as the league has grown from 12 to 16 teams.

As Chinese soccer has grown domestically, the league has begun to throw around its financial weight in the international transfer market, thus boosting the total market value of CSL players. The league’s total value, according to Transfermarkt estimates of its players’ transfer market values (as opposed to aggregate transfer buys) has risen to about $380 million. Teixeira’s transfer fee alone accounts for 15 percent of that. That’s humongous. Gareth Bale’s record-breaking (unless you ask Ronaldo) transfer fee to Real Madrid in 2013 came in north of $100 million, yet represented a mere 3 percent of the more than $3.4 billion estimated market value of La Liga’s players in 2013.

Although the CSL is making international news with a few big-ticket signings, as a whole, the league is still small. The league’s total estimated market value is still half as big as even Portugal’s national league, and it pales in comparison to England’s Premier League, which is valued at $4.7 billion. In fact, the total market value of all 16 CSL teams is still less than that of just Liverpool. Thus, a transfer fee comparable to the one between the CSL and Teixeira would be about $700 million (!).

(As CSL teams make it rain, it’s worth noting that this cash isn’t being evenly distributed. Foreign players make far more than Chinese players. CSL teams must abide by a strict cap of no more than four overseas players, plus one from another country in the Asian Football Confederation. And according to 2012 data, these foreign players pulled in earnings more than five times larger than those of their Chinese teammates. The disparity has probably only grown as the CSL hunts for pricier international stars.)

In some ways, the CSL has taken Major League Soccer’s model and supercharged it. MLS has tried — with debatable success — to gin up fan interest by splurging on a few big-name, often well-aged, international players. David Beckham joining the Los Angeles Galaxy in 2007 on a (comically inaccurate) “$250 million” deal comes to mind. By the 2008 season, the entire MLS had an estimated market value of about $157 million; with more than $10 million of that being Beckham. Today, that number has crept up to $314 million — exponential growth, but well behind the pace being set in China. So the CSL is following the MLS script, to a degree, only with players in their primes instead of broken-down warhorses like Frank Lampard.

Some macroeconomic context helps, too. Although there are signs that China’s economy is slowing, and its stock market has been a disaster over the past year, the appetite of Chinese sports fans doesn’t seem to be lagging. The slowdown within the Chinese economy seems to be focused on real estate, state-owned enterprises and the stock market. Although growing indebtedness is an issue, Chinese consumers are better positioned than other parts of the Chinese economy. So expect demand for — and spending from — Chinese Super League teams to keep growing. China has a very long way to go before it’s a top player in international club soccer, but if consumer interest grows at the pace it’s set, the CSL might just continue to draw stars anyway.

CORRECTION (Feb. 19, 2 p.m.): An earlier version of this article incorrectly described the basis for determining the monetary valuation of players in soccer teams and leagues. That valuation is measured by a Transfermarkt calculation of overall player market values, not just salaries. Transfermarkt makes the calculation based on the estimated value of the player in the transfer market. References in the article to how much teams and leagues have spent on salaries have been changed to the market values of their players.

Andrew Flowers writes about economics and sports for FiveThirtyEight. @andrewflowers